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Small Business Administration Loans

Written by: Richard Matheson

Article Overview: Most entrepreneurs in the U.S. will be familiar with the SBA and its small business administration loans and if they’re not, they should be. The SBA is one of the key financiers behind small businesses throughout America. If you’ve tried your hand with angel investors to no avail, and have been turned down by the banks, the SBA might be just your ticket to business success.

Small Business Administration Loans

Most entrepreneurs in the U.S. will be familiar with the SBA and its small business administration loans and if they’re not, they should be. The SBA is one of the key financiers behind small businesses throughout America. If you’ve tried your hand with angel investors to no avail, and have been turned down by the banks, the SBA might be just your ticket to business success.

The SBA was established in 1953 as an independent branch of the American federal government. It has four main areas of assistance to American entrepreneurs, namely: advocacy, management, procurement, and financial assistance. The SBA’s loans and investment programs fall under its financial assistance mandate.

The SBA makes a number of different loan programs available to entrepreneurs throughout the country. While it isn’t the lender itself, it serves as the guarantor of loans by others.

The Basic Section 7(a) Loan Guaranty Program is the major kind of small business administration loans overseen by the SBA. Here, financing is given to entrepreneurs who might not typically qualify for loans through the normal lending channels. Lenders who participate in this program are given a guaranty of a portion of the loan by the SBA. The borrower, however, is still committed to repaying the amount of the loan in full.

In order to be eligible for a Section 7(a) loan, the business must meet a number of requirements. First, there are size limits. For instance, in the retail industry, a company’s annual sales must not be more than $29 million, while companies within the manufacturing and mining industries may have no more than 500 employees.

Second of all, the businesses must be for-profit and must operate or intend to operate in the U.S. They must also demonstrate their ability to repay the loan. There are also a number of restrictions set out as to how the proceeds of the loan can be used.

The SBA’s small business administration loans are meant to “maintain and strengthen the nation’s economy by aiding, counseling, assisting and protecting the interests of small businesses and by helping families and businesses recover from national disasters.”

If you’re an entrepreneur that has been turned down for traditional loans, then you will want to visit the SBA website to find out more information. There, you’ll find all you need to know about the SBA’s loan programs, including its specialty loan programs, as well as its investment division and surety guarantees. There are special sections to help female entrepreneurs, veterans, Native Americans, and young entrepreneurs. The sites’ Small Business Planner is also useful for learning how to everything from writing a business plan, to finding a mentor, to naming your business, to choosing a market and price, to transferring ownership and liquidating your assets.

Finding the capital you need to get your business idea off the ground can be a daunting task, but don’t get turned off by one or two rejections. Look to the small business administration loans program and see if you’re eligible for a loan today.

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